Correlation Between Aptitude Software and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Aptitude Software and Synthomer Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aptitude Software and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptitude Software Group and Synthomer plc, you can compare the effects of market volatilities on Aptitude Software and Synthomer Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aptitude Software with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptitude Software and Synthomer Plc.
Diversification Opportunities for Aptitude Software and Synthomer Plc
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aptitude and Synthomer is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aptitude Software Group and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and Aptitude Software is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aptitude Software Group are associated (or correlated) with Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Aptitude Software i.e., Aptitude Software and Synthomer Plc go up and down completely randomly.
Pair Corralation between Aptitude Software and Synthomer Plc
Assuming the 90 days trading horizon Aptitude Software is expected to generate 3.47 times less return on investment than Synthomer Plc. But when comparing it to its historical volatility, Aptitude Software Group is 1.69 times less risky than Synthomer Plc. It trades about 0.04 of its potential returns per unit of risk. Synthomer plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,820 in Synthomer plc on November 4, 2024 and sell it today you would earn a total of 840.00 from holding Synthomer plc or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptitude Software Group vs. Synthomer plc
Performance |
| Timeline |
| Aptitude Software |
| Synthomer plc |
Aptitude Software and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptitude Software and Synthomer Plc
The main advantage of trading using opposite Aptitude Software and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptitude Software position performs unexpectedly, Synthomer Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| Aptitude Software vs. Arrow Electronics | Aptitude Software vs. Ecclesiastical Insurance Office | Aptitude Software vs. LPKF Laser Electronics | Aptitude Software vs. Beazer Homes USA |
| Synthomer Plc vs. Kinnevik Investment AB | Synthomer Plc vs. Datalogic | Synthomer Plc vs. Batm Advanced Communications | Synthomer Plc vs. Dairy Farm International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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